In theory we could quit now and enjoy a nice gain for August and avoid the risk of the FOMC meeting.
Theory never works well for me. In practice theory is always handicapped by reality. The reality in this case is the bid/ask spread. All but one of our positions is in positive territory with a gross profit of $3.51. Unfortunately by the time we subtract the bid/ask spread and some commissions there would be little left. We need at least one more good day in the market to insure a decent profit on all positions.
The pothole in our road to riches is of course the FOMC meeting on Tuesday. The market is expecting the Fed to downgrade their outlook for the economy and possibly add some further policy accommodation in the form of mortgage or treasury purchases. However, with Bernanke t the helm there could be some new and novel form of Fed sleight of hand that is designed to stimulate the market. Personally I would like to see them spend that $200 billion of expiring mortgage backed security money in the equities market. A roaring stock market would go a long way towards rebuilding consumer sentiment. Alas, that dream will never come to pass or at least they will never admit to juicing the stock market.
We got decent entries this morning on the weekend recommendations with the exception of FSLR and MELI, both of which spiked to the high of the day on the opening print.
Check the graphic for new stop losses.
There are several different formulas for determining margin requirements for naked put writing. These are normally broker specific and some can require larger margin requirements than others.
Here is the most common margin calculation for naked puts.
100% of the option premium + ((20% of the Underlying Market Value) - (OTM Value))
For simplicity of calculation simply use 20% of the underlying stock price and you will always be safe. ($25 stock * 20% = $5 margin)
Prices Quoted in Newsletter
At Option Investor we have a long-standing policy prohibiting the editors and staff from actually trading the individual recommendations in order to conform to SEC rules concerning trades.
The prices quoted in the newsletter are the end of day prices in most cases.
When discussing fills or stops the prices quoted are the bid/ask at the time the entry trigger or exit stop is hit. This is NOT a price that someone on staff actually got using a live order.
For entry/exit points at the market open the prices quoted will be the opening print. The majority of the time the readers are able to get a better fill than the opening print because of market maker bias at the open.
For trades with an opening qualification the prices quoted will be the bid/ask at the time the qualification was met.
All of these rules normally produce worse prices than an active trader would normally get. Because they are standardized there may be some cases where a price quoted was better than an actual fill. If you received a price that was dramatically different than what was quoted just send us an email and we will use your price.